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May 13, 2014
Economy Update -IIP


IIP Numbers

Page | 2
For private circulation only Sumedha Fiscal Services Limited | www.sumedhafiscal.com
Negative trend continued for the month of March 2014 for the IIP numbers. The headline figure came in at
a negative 0.5 percent compared to a positive 3.5 percent for the same corresponding period last year. The
figure had come in at a negative 1.90 percent for the month of February 2014. The reasons for the dismal
performance remain the same. The key sectors manufacturing and capital goods are not performing. The
growth rate for the manufacturing sector was a negative 1.2 percent while for the capital goods sector, the
growth rate was a negative 12.5 percent. The trend remains negative for both the sectors. We are holding
our view that the performance of the capital goods index is a proof that investment activity is yet to pick up
in the Indian economy. Moreover without pick up in economic activity, it will also have a depressing impact
on other sectors as well.

Moreover rising inflation levels is making making it difficult to stimulate the economy. India's annual
consumer price inflation in April accelerated to a three-month high of 8.59 percent, mainly driven by higher
food prices. Higher levels of inflation will make it difficult for the Reserve Bank of India to cut interest rates.
As the situation prevails, without lower interest rates, growth will not pick up on one hand while on the
other hand lower interest rates might stoke up inflation even more. It is a complex situation for th economy
and looking at the recent policy measures, inflation seems to be the prime concern.










Source: CSO, SFSL Research
IIPGeneral Rate (%)
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
S
e
p
-
1
1
J
a
n
-
1
2
M
a
y
-
1
2
S
e
p
-
1
2
J
a
n
-
1
3
M
a
y
-
1
3
S
e
p
-
1
3
J
a
n
-
1
4


IIP Numbers

Page | 3
For private circulation only Sumedha Fiscal Services Limited | www.sumedhafiscal.com




































Source: CSO, SFSL Research
Capital Goods (%)
-40
-30
-20
-10
0
10
20
30
40
50
60
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
S
e
p
-
1
1
J
a
n
-
1
2
M
a
y
-
1
2
S
e
p
-
1
2
J
a
n
-
1
3
M
a
y
-
1
3
S
e
p
-
1
3
J
a
n
-
1
4

Mining & Quarrying (%)
-10
-5
0
5
10
15
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
S
e
p
-
1
1
J
a
n
-
1
2
M
a
y
-
1
2
S
e
p
-
1
2
J
a
n
-
1
3
M
a
y
-
1
3
S
e
p
-
1
3
J
a
n
-
1
4

Electricity (%)
-6
-4
-2
0
2
4
6
8
10
12
14
16
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
S
e
p
-
1
1
J
a
n
-
1
2
M
a
y
-
1
2
S
e
p
-
1
2
J
a
n
-
1
3
M
a
y
-
1
3
S
e
p
-
1
3
J
a
n
-
1
4

Manufacturing (%)
-10
-5
0
5
10
15
20
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
S
e
p
-
1
1
J
a
n
-
1
2
M
a
y
-
1
2
S
e
p
-
1
2
J
a
n
-
1
3
M
a
y
-
1
3
S
e
p
-
1
3
J
a
n
-
1
4


IIP Numbers

Page | 4
For private circulation only Sumedha Fiscal Services Limited | www.sumedhafiscal.com










































Source: CSO, SFSL Research
Intermediate Goods (%)
-10
-5
0
5
10
15
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
S
e
p
-
1
1
J
a
n
-
1
2
M
a
y
-
1
2
S
e
p
-
1
2
J
a
n
-
1
3
M
a
y
-
1
3
S
e
p
-
1
3
J
a
n
-
1
4
`

Consumer Non-Durables (%)
-10
0
10
20
30
40
50
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
S
e
p
-
1
1
J
a
n
-
1
2
M
a
y
-
1
2
S
e
p
-
1
2
J
a
n
-
1
3
M
a
y
-
1
3
S
e
p
-
1
3
J
a
n
-
1
4


Consumer Durables (%)
-30
-20
-10
0
10
20
30
40
50
60
70
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
S
e
p
-
1
1
J
a
n
-
1
2
M
a
y
-
1
2
S
e
p
-
1
2
J
a
n
-
1
3
M
a
y
-
1
3
S
e
p
-
1
3
J
a
n
-
1
4
Basic Goods (%)
-4
-2
0
2
4
6
8
10
12
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
S
e
p
-
1
1
J
a
n
-
1
2
M
a
y
-
1
2
S
e
p
-
1
2
J
a
n
-
1
3
M
a
y
-
1
3
S
e
p
-
1
3
J
a
n
-
1
4


IIP Numbers

Page | 5
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